The following is by Jacob at My Personal Finance Journey as part of the Yakezie blog swap. The topic of this blog swap was to discuss our biggest financial pet peeves. You can view my post live today over at Jacob’s site.
Hello everyone! It's a pleasure to be posting today at Narrow Bridge Finance! When I started to think about what to write for the topic of this week's Yakezie Blog Swap, I really came up with three things that are tied for qualifying as my biggest financial pet peeves. They are 1) financing furniture, 2) buying expensive drinks at bars/restaurants, and 3) active investing styles.
Each of these is discussed separately below! Enjoy!
Financial Pet Peeve # 1 – Financing Furniture Someone Cannot Afford
After moving in to my condo in August of last year, I began to receive the typical “new homeowner junk mail” – ads from local businesses, home insurance offers, and most of all furniture advertisements! It really was quite amazing how many I received!
One of the offers I received was a double coupon for 1) a free table lamp and 2) 10% any purchase of $100 or more. I thought to myself, “Wow, a free table lamp! Can't beat that!” So, I ventured to the store to pick up my freebie. When I got to the store and was checking out, I was amazed at the sheer number of staff they had committed to setting people up with furniture that they cannot afford, thanks to easy financing/loans options!
I'll be the first to admit that yes, I am a pretty frugal person (and proud of it!). And, while I myself would not easily partake in taking out huge amounts of consumer debt on depreciating assets, I do understand why people have to do it in order to buy something essential for non-big-city living, such as an automobile.
However, I simply cannot tolerate the idea of people taking out a loan on a $5000 leather, jaguar/leopard Italian designer couch that they cannot afford. Why is this? Well, it's because there are a plethora of perfectly acceptable couches on sites like Craigslist.org that people are basically giving you just to take it off their hands. Another good source for furniture is from family members! And, while the piece of furniture may not be the “perfect dream couch” you have wanted since childhood, it will do just fine until you can plan your finances to save for such a purchase. End rant.
Financial Pet Peeve # 2 – Buying a Drink For More Than $10
When you go out to dinner, it is incredibly nice to have a glass of wine or a mixed drink. However, it has always amazed me at the number of people willing to pay as much for one drink as they will for a plate full of food.
I am guessing that this just comes down to personal preference. Personally, a stomach full of delicious food that I could not easily cook for myself at home is well worth the $10-$15 that I usually pay a decent restaurant.
However, I simply do not obtain any pleasure by drinking a $10 glass of wine at a restaurant when I know that I would be just as happy if I had a glass of a $15 bottle of the same Virginia wine 1) before I go to the restaurant and 2) when I get back.
Financial Pet Peeve # 3 – Investing in Individual Stocks or Actively Managed Funds
It is no secret to the readers of My Personal Finance Journey that I am an avid believer in employing a passive investing strategy. What does this mean exactly? I mean that I invest in low-cost mutual funds that simply track established world indices (S&P 500, Wilshire 5000, etc) instead of pouring money in to picking individual stocks.
I employ this type of investing style because numerous studies of investor performance have shown that 70-80% of investment “professionals” fail to outperform the market indices.
Even with this information available readily to investors, the majority of investors are still drawn to investing in individual stocks. I myself was even drawn to investing in individual stocks in the beginning of my investing days. Like many others, I wanted to use my intellect to do my research, select winning stocks, and get rich!!!
However, I found out that the stock market is not small enough to hope to be understood by one person. It's not like some lab experiment where you control the variables and can obtain the result you want if you work hard enough.
Sure, in twenty years, we will be able to look back and pick out the 5 people that were able to consistently outperform the markets. But, I simply do not think that it is worth people's time when focusing on an appropriate asset allocation with a passive investment strategy will more likely yield a better result.
How about you all? What financial moves do people make that really get your temperature to rise? Have you ever confronted any one that performs these actions to get them to stop? Did it have an effect on them?
Share your experiences by commenting below!